Ambac Financial Group

MBIA Inc., the world's largest bond insurer, held onto its top credit ratings from Standard & Poor's on Monday, quieting fears that downgrades by S&P would worsen the long-running credit crisis. S&P said it grew more confident about MBIA's stability after the insurer this year raised $2.6 billion by issuing new shares and debt. But the outlook for MBIA's ratings over the next six months to two years remains negative because of the size of its potential losses compared with the insurer's capital cushion, S&P said.

Bond insurance giant MBIA Inc. said Tuesday that it brought back its former chief executive and that it might separate its municipal bond business to protect that unit from losses the company was facing on mortgage-backed bonds. But Wall Street didn't seem impressed: MBIA shares slid 54 cents, or 4.4%, to $11.70. MBIA said Joseph "Jay" Brown returned as chairman and chief executive of MBIA after the ouster of former CEO Gary Dunton on Saturday. Brown, 59, was CEO until 2004, when Dunton took over.

MBIA Inc., the giant bond insurer hobbled by the sub-prime mortgage market's collapse, said Wednesday that it would cut its dividend 62% and raise $1 billion in a sale of notes to boost capital and preserve its AAA credit rating. The announcement drove the firm's shares to their lowest level in 16 years in early trading. But the stock recouped most of the day's loss later in the session, after an official at Warren Buffett's Berkshire Hathaway Inc. said the company might throw a lifeline to struggling bond insurers.

New York state insurance regulators confirmed Wednesday that they met with some major U.S. banks to discuss raising fresh capital for struggling bond insurance companies. Talks with the unnamed banks were part of New York State Insurance Superintendent Eric Dinallo's effort to stabilize the bond guarantors and bolster the industry's finances, agency spokesman Andrew Mais said.

Billions of dollars of municipal bonds insured by ACA Financial Guaranty Corp. were cut to "junk" status Wednesday after Standard & Poor's downgraded the insurer itself because of its exposure to losses on mortgage-backed debt. S&P slashed its rating on ACA Financial to CCC from A, which already was the lowest rating among bond insurers. S&P said ACA's capital cushion of $650 million was $2.2 billion short of what it needed to cover potential losses.

Warren Buffett's Berkshire Hathaway Inc. is starting a municipal-bond insurer that is likely to lure business from established rivals struggling with credit market turmoil. The new insurer, Berkshire Hathaway Assurance Corp., received a license to operate from New York state's insurance department Friday, a department spokesman said. Buffett's entry puts pressure on the largest bond insurers, MBIA Inc. and Ambac Financial Group Inc.

Stocks retreated again Friday after readings on jobs and manufacturing -- the first reports for the third quarter -- indicated that businesses and workers still face a tough economy. The major indexes ended a turbulent week narrowly mixed. A massive quarterly loss at General Motors and rising oil prices also gave investors reason to trade cautiously.

Warren E. Buffett has a reputation as a philanthropist who cares deeply about the social issues of the day. But on Tuesday, the billionaire lived up to another part of his reputation: that of an opportunistic investor. Buffett said he had made an offer to three struggling bond-insurance companies to help them insure $800 billion in municipal bonds. In an interview on cable channel CNBC, Buffett said he was willing to reinsure muni bonds now covered by MBIA Inc., Ambac Financial Group Inc.

Defaults on privately insured U.S. mortgages rose 35% in November to a record, an industry report showed Monday, adding evidence about the depth of the U.S. housing slump. The number of insured borrowers falling more than 60 days late on payments jumped to 61,033 last month from 45,325 in November 2006, according to data from members of the Washington-based Mortgage Insurance Companies of America. The missed payments, often a prelude to foreclosure, represented a 2.9% increase from October.

The rich were on their way to getting richer Tuesday -- if they were buyers of long-term tax-free bonds in California's $1.5-billion debt offering. The not-so-rich fared OK too. The market for municipal bonds in general has turned rocky in recent weeks, favoring buyers over sellers and pushing interest rates higher. That forced the state to pay up to sell its longest-term issues in Tuesday's offering. The 30-year issue in the deal will pay interest at a 5.3% annualized rate, compared with 4.96% on 30-year bonds the state sold in early April.